Ernakulam District Commission Holds Federal Bank Accountable for charging more cash fees

The Ernakulam District Commission, chaired by Shri D.B. Binu, Shri V. Ramachandran, and Smt. Sreevidhia T.N., recently ruled that Federal Bank failed in its duty by not directly refunding an excess charge to a customer, despite having the customer’s contact details. This was deemed a clear deficiency in service. Click here to join our whatsapp channel to receive banking news updates.

Case Summary

A customer went to Federal Bank’s Perumbavoor Branch to deposit ₹20,000 into an account at the Koratty Branch. The customer handed over ten bundles of cash, each with 100 notes of ₹20, to the Cash Officer. Due to a long queue, the Cash Officer initially refused to accept the deposit, asking the customer to get approval from the Branch Manager. The Manager suggested using NEFT/RTGS for the transfer instead, but the customer insisted on depositing cash. After some back and forth, the bank finally accepted the deposit but charged a ₹100 counting fee.

The customer argued that, according to the bank’s rules, only ₹50 should have been charged for counting notes of denominations below ₹50. Feeling wronged, the customer claimed this overcharge caused mental distress and financial loss, prompting them to issue a legal notice. They then approached the District Commission, alleging poor service and seeking a refund of ₹50, along with ₹5,00,000 for mental anguish, ₹5,00,000 for the illegal charge, and ₹25,000 for legal costs.

Bank’s Defense

The bank argued that the complaint was baseless and an attempt to gain money through false claims of misconduct and distress. The bank acknowledged the customer’s deposit of ₹20,000 but denied any delays or misbehavior by the Cash Officer. They admitted to mistakenly charging ₹100 instead of the correct ₹59 (₹50 plus ₹9 GST). After receiving the legal notice, the bank refunded the excess ₹41 to the account holder. The bank argued that there was no deficiency in service because the excess amount was refunded, and no further compensation was necessary.

Commission’s Observations

The Commission examined the evidence and noted that the bank’s rules clearly stated a ₹50 fee for counting the ten bundles of ₹20 notes. The bank’s mistake in charging ₹100 was evident. Although the bank eventually refunded the excess ₹41 to the account holder, this was only done after the customer sent a legal notice. The Commission found that the bank’s excuse for not directly refunding the excess amount to the customer—citing the lack of an account—was unreasonable, especially since they had the customer’s contact information. The Commission ruled that the bank’s failure to directly resolve the issue with the customer amounted to poor service.

Ruling

The District Commission ruled in favor of the complainant and ordered Federal Bank to:

• Refund the excess ₹50
• Pay ₹3,000 for mental distress
• Cover ₹5,000 in legal costs

This ruling highlights the importance of banks taking direct and timely action to correct their mistakes and maintaining transparent communication with customers to prevent unnecessary distress.